Four More Years – The Enforcement Outlook

The election is over. Whew!! Washington, D.C. is slowly getting back to “normal.” The question now is what changes, if any, will occur in the enforcement arena.

There is no question that if Romney had been elected, the enforcement landscape would have changed. One area that would not have changed – and may never change for the foreseeable future – is FCPA enforcement. However, in other areas like antitrust (DOJ and FTC) and regulatory enforcement (e.g. CFPB, OSHA, DOL, NLRB) Romney would have reduced and restrained existing enforcement programs.

Over the next four years, the Obama Administration is likely to push its existing agenda and add a few more initiatives to its aggressive program. Here is list and summary of priorities:

1. FCPA – The Justice Department has been the global leader in enforcement. Any attempts to scale this back are doomed – the Chamber of Commerce “reform” initiative has to be revamped and refocused. The Chamber has to reset and start all over again.

More importantly, DOJ’s FCPA enforcement program has become inextricably intertwined in a global movement to fight corruption, and is strongly supported by other agencies in the US government, including the State Department. For the next four years, FCPA enforcement will continue unabated and unrestricted. For companies, anti-corruption compliance will continue as a high priority.

2. Healthcare – The Justice Department and HHS are poised to expand healthcare fraud enforcement beyond the record levels of the last four years. It is hard to imagine an even tougher enforcement environment, but health care has been — and will remain — a significant focus for federal law enforcement. DOJ and HHS have all the tools they need – a False Claims Act which has been amended to include pro-government amendments; a broad off-label enforcement program which has been expanded to medical device companies; and plenty of resources to tackle these issues and sophisticated healthcare fraud schemes.

Hospitals and other healthcare providers are the next targets for major prosecutions. At bottom, the Administration believes that hospitals and doctors are bilking Medicare and Medicaid. The first salvo was recently fired when the Administration warned hospitals to improve the accuracy of claims submissions using electronic health records.

3. Consumer Finance Protection Bureau – The CFPB’s enforcement will grow significantly over the next four years. Mortgage companies, banks and credit card companies have been the primary targets in the stand-up of the CFPB. Next up for vigorous enforcement will be auto finance and debt collectors. The CFPB will be a new and strong player in the regulatory enforcement area.

4. Money Laundering – The Justice Department and the Treasury Department are expanding anti-money laundering enforcement targeting banks and non-banks for deficiencies in their anti-money laundering compliance programs. In addition, FINCEN and OFAC are imposing more regulatory requirements and requiring banks and other financial institutions to increase scrutiny of customers, accounts and financial transactions.

5. Privacy and Data Security Enforcement – The Administration will continue its enforcement initiatives in this area. As the Internet expands, the US public is demanding greater privacy protections. The Administration is responding to these concerns to prosecute companies for inadequate compliance programs. Data security will continue across various regulated sectors (e.g. HIPAA), until the Congress enacts federal data breach and protection legislation.

6. Export Control/Sanctions – The Justice Department will continue its aggressive enforcement effort. With the increase in sanctions and the President’s recent Executive Orders expanding the reach of its sanctions program to non-US persons, the risks are even more significant. At the same time, US Customs has increased enforcement against companies seeking to evade duties and fees in international trade.

7. Antitrust — The Antitrust Division and the FTC have set in place a more aggressive enforcement program, particularly in the merger enforcement area. DOJ and the FTC will continue their competition enforcement in the healthcare industry, especially against health insurance companies and healthcare service providers.